International Compliance Bloghttps://www.steptoeinternationalcomplianceblog.com
Wed, 13 Dec 2017 19:11:59 +0000en-UShourly1https://wordpress.org/?v=4.7.8Limited Reopening of U.S. Visa Processing at Consulates in Russiahttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/khSFK0s3_Bw/
Mon, 11 Dec 2017 17:38:58 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1859Continue Reading]]>On December 4th, the U.S. Embassy in Moscow announced that nonimmigrant temporary visa (NIV) interviews will resume on a limited basis at the three U.S. consulates in Russia. As of December 11, 2017, the U.S. consulates in St. Petersburg, Yekaterinburg, and Vladivostok will resume visa nonimmigrant visa processing at a level described as “limited.”

This is an update to our previous post “U.S. Visa Operations across Russia Temporarily Suspended” explaining the August 21, 2017 U.S. Department of State (DOS) suspension and partial, limited, resumption of NIV operations within Russia. Since that time, nonimmigrant visa interviews in Russia have been conducted exclusively at the Embassy in Moscow leading to ongoing substantial nonimmigrant visa interview backlogs.

The reopening of the U.S. consulates in Russia for NIV interviews should help to reduce the wait time for such interviews. However, operations are below full capacity, this action will not restore appointment availability and wait times to standard levels. The waiting times are likely to continue to be measured in months, not days, until these issues are resolved. While the resumption of services is a welcomed measure, their limited nature requires ongoing monitoring.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/12/limited-reopening-of-u-s-visa-processing-at-consulates-in-russia/Travel Ban Injunction Lifted by Supreme Courthttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/MGXX0j9FN7s/
Thu, 07 Dec 2017 23:38:38 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1855Continue Reading]]>The U.S. Supreme Court has cleared the way for enforcement of President Trump’s September 24, 2017 travel ban. On December 4, 2017, the U.S. Supreme Court issued two, virtually identical, orders staying preliminary injunctions issued against the travel ban by lower courts in Maryland and Hawaii. The Court’s actions allow the September 24, 2017 edition of the travel ban to proceed while the Fourth and Ninth Circuit Courts of Appeals consider legal challenges to the ban on an expedited basis.

The travel ban at issue is the third in a series of hotly contested immigration restrictions implemented by President Trump via Executive Order (EO). The September 24, 2017 presidential travel ban proclamation is grounded in a global review of information sharing and security practices and identification of countries deemed to be “inadequate” in this regard. The broad scope global information sharing and security review was mandated by the March 6, 2017 EO travel ban.

As explained in more detail, below, the September 24 proclamation contains travel restrictions applicable to nationals of eight countries: Iran, Libya, Somalia, Syria, Yemen, Chad, North Korea and Venezuela. Challenges to the ban filed in Maryland and Hawaii resulted in partial injunctions, applicable to the listed countries, other than North Korea and Venezuela. The injunctions limited the ban’s restrictions to foreign nationals without a bona fide relationship with certain persons (family) or entities in the U.S. Thus, the injunction provided a reprieve to eligible nationals of Iran, Libya, Somalia, Syria, Yemen, and Chad, if they could demonstrate a qualifying U.S. family or entity relationship. The Supreme Court’s December 4th order removes this injunction and, thereby, allows the proclamation to move forward in full force without a bona fide relationship exception.

The following explains the ban’s travel restrictions, applicable to eight designated countries.

Countries Under Travel Restrictions

The eight countries whose citizens or nationals are subject to some form of travel restriction under the September 24, 2017 proclamation are: Iran, Libya, Somalia, Syria, Yemen, Chad, North Korea, and Venezuela. Notably, Chad, North Korea and Venezuela were new additions to the travel ban. Also notable is the removal of Sudan. Sudan was included in both the initial January 27 EO travel ban and subsequent March 6 EO. As explained in more detail below, the specific restrictions vary from country to country. Phase-in periods for the restrictions have all passed; thus, there is no delay or phase in of these restrictions.

Restrictions

Least Restrictive: Venezuela

No B-1, B-2 or B1/B-2 (visitor) visas for designated government officials and their immediate family members. No other restrictions. The restrictions apply only to officials of the Ministry of Interior, Justice, and Peace; the Administrative Service of Identification, Migration and Immigration; the Corps of Scientific Investigations, Judicial and Criminal; the Bolivarian Intelligence Service; and the People’s Power Ministry of Foreign Affairs, and their immediate family members.

Most Restrictive: North Korea and Syria

North Korea and Syria: No non-immigrant or immigrant visas.

Remaining Countries: Libya, Yemen, Chad, Iran, Somalia

The remaining countries, Libya, Yemen, Chad, Iran and Somalia, are all precluded from immigrant (permanent) or diversity visas. There is variation in the level of restriction on non-immigrant (temporary) visas.

To address some common misunderstandings and questions, it should be noted that:

-The restrictions apply only to nationals and citizens of the listed countries.

-The restrictions are not prohibitions placed upon individuals who have traveled to the listed countries. Restrictions based upon travel to particular countries were implemented under the Obama administration and are limited to visa waiver (ESTA) travel.

-Dual nationals of a restricted and non-restricted country may travel without restriction, provided they utilize ONLY travel documents issued by the non-restricted country. They must present only the passport of the non-restricted country. The U.S. visa (if any) must be in the non-restricted passport.

-The Venezuelan restrictions do NOT apply to anyone other than Venezuelan governmental officials. Government officials within designated departments are precluded from travel on B-1/B-2 (visitor) visas.

-The proclamation does not revoke or otherwise invalidate existing visas. Visas issued prior to the September 24, 2017 proclamation remain valid. (However, caution is advised for such individuals as there is the potential for misunderstandings in implementation of this provision at multiple points in the travel process.)

-The proclamation does not change the status of individuals present in the U.S., it restricts travel to the U.S. and issuance of designated new immigration benefits.

-The proclamation contains provisions for exceptions or waivers of the restrictions in limited circumstances.

Expect Additional Scrutiny at Port of Entry (and More)

Citizens and nationals of listed countries who continue to have immigration options should expect a higher level, strict review throughout the immigration process. Those seeking admission at a U.S. port of entry should anticipate placement in secondary inspection for a more detailed questioning and search of belongings. In the proclamation, this heightened scrutiny is specified as either “additional measures” for Venezuela, “enhanced screening and vetting” for Iran, or “additional scrutiny” for Somalia.

Iraq: Special Provisions

While Iraq is not included in the travel ban, it is identified in the proclamation as a country with “inadequate” identity-management protocols, information sharing practices and other risk factors. Therefore, nationals of Iraq are to be given strict scrutiny when trying to enter the U.S. Iraqis should be prepared for secondary inspection, with related delays and questioning, upon arrival at a U.S. port of entry. Although not specified in the proclamation, Iraqis should expect close scrutiny at all points in the immigration process.

Conclusion: Ongoing Uncertainties

This development is significant both in its effect as well as for what it indicates regarding the disposition of the Supreme Court toward the revised travel ban. The timing of this decision, just before peak holiday travel season, sets the stage for difficulties for international airlines, U.S. Ports of Entry, and international travelers. Moreover, this is far from the end of the travel ban journey. In addition to appeals in the fourth and ninth circuits, there are ongoing immigration and security related review requirements within the September 24 proclamation. These procedures, in turn, determine the need for nationality-based restrictions on immigration. This leaves open the likelihood of similar future immigration restrictions based upon country of birth or citizenship. As the result of a series of legal challenges, the restrictions are narrowing with each version of the travel ban. However, even with these modifications, the terms and uncertainties of the travel ban remain challenging for international travelers and their families, as well as the U.S. businesses that rely on foreign nationals as customers or employees.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/12/travel-ban-injunction-lifted-by-supreme-court/The DOJ’s New FCPA Corporate Enforcement Policy: Dangling Presumptive Declination as an Incentive for Voluntary Disclosurehttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/EAtR4uuyqGA/
Wed, 06 Dec 2017 19:49:49 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1853Continue Reading]]>As we discussed in last week’s blog post, on November 29, 2017, Deputy Attorney General Rod J. Rosenstein made remarks at the American Conference Institute’s 34th International Conference on the Foreign Corrupt Practices Act (FCPA) recognizing the success of the FCPA Enforcement Plan and Guidance (commonly referred to as the FCPA “Pilot Program”), which had been in effect since April 5, 2016. In those remarks, Mr. Rosenstein also announced a revised FCPA Corporate Enforcement Policy. The new policy, which has been formally incorporated into the US Attorneys’ Manual (USAM), and is specific to the FCPA, continues and builds upon aspects of the Pilot Program. Its goal is to “increase the volume of voluntary disclosures” by providing additional transparency and certainty concerning the benefits of voluntary disclosure, full cooperation, and full and timely remediation, thereby “enhanc[ing] the [DOJ’s] ability to identify and punish culpable individuals.” A transcript of Mr. Rosenstein’s remarks can be found here.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/12/the-dojs-new-fcpa-corporate-enforcement-policy-dangling-presumptive-declination-as-an-incentive-for-voluntary-disclosure/Use of Testimony Compelled in Foreign Jurisdictionshttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/bx05k41dOd0/
Tue, 05 Dec 2017 22:21:38 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1850Continue Reading]]>In November, the US Circuit Court for the Second Circuit declined to rehear en banc its July 19, 2017 decision in United States v. Allen, which recognized the testimony of a criminal defendant that is compelled by law in a foreign jurisdiction cannot be used, either directly or indirectly, as evidence against him at trial. The Second Circuit’s decision has broad consequences for individuals involved in criminal investigations with a multijurisdictional dimension in both the United States and countries where testimony can be compelled. This includes investigations inherently transnational in character, such as FCPA investigations, as well as investigations that may arise in other areas of cross-border activity, for example those involving civil agencies like the SEC and CFTC.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/12/use-of-testimony-compelled-in-foreign-jurisdictions/Deputy Attorney General Rosenstein Announces Significant New FCPA Corporate Enforcement Policyhttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/2WqqAQj6KYU/
Thu, 30 Nov 2017 16:34:37 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1846Continue Reading]]>Yesterday, in remarks made at the 34th International Conference on the FCPA, Deputy Attorney General Rod J. Rosenstein recognized the success of the FCPA Pilot Program and announced a revised FCPA Corporate Enforcement Policy geared at “increas[ing] the volume of voluntary disclosures” and “enhanc[ing] the [DOJ’s] ability to identify and punish culpable individuals.” A transcript of Mr. Rosenstein’s remarks can be found here.

Most importantly, the policy – which has been formally incorporated into the United States Attorneys’ Manual and is limited to FCPA cases – creates the presumption that a company meeting all standards relating to voluntary self-disclosure, full cooperation, and timely and appropriate remediation will have their case resolved through a declination “absent aggravating circumstances involving the seriousness of the offense or the nature of the offender.” Under the policy, aggravating circumstances include (but are not limited to):

– Executive level involvement in the misconduct;

– Significant profits to the company resulting from the misconduct;

– Pervasiveness of the misconduct; and

– Criminal recidivism.

Even where such aggravating factors may exist, however, companies that voluntarily self-disclose and have fully cooperated are eligible to receive up to a recommended 50% reduction off of the lower end of the U.S. Sentencing Guidelines (“U.S.S.G.”) fine range (except in cases involving criminal recidivism) and “generally will not require appointment of a monitor” (to the extent a company has already implemented an effective compliance program when a resolution is reached). Where a company has fully cooperated but did not voluntarily disclose misconduct, they may still be eligible for up to a 25% reduction off of the lower end of the U.S.S.G. fine range.

Companies will still be required to pay disgorgement, forfeiture, or restitution under the new policy, even where they have made a voluntary disclosure and have fully cooperated with enforcement authorities. These payment requirements may be satisfied by a parallel resolution with a relevant regulator, such as the SEC.

The new policy is clearly designed to further incentivize voluntary disclosure. It also provides helpful guidance on steps companies must take in order to qualify for voluntary self-disclosure, as well as relevant factors in evaluating a company’s full cooperation and timely and appropriate remediation. Notably, the elements of “full cooperation” outlined in the new policy (which is largely based on the Yates memorandum) are “in addition to” those outlined in the current Principles of Federal Prosecution of Business Organizations and include, among other requirements, the disclosure of overseas documents and facilitation of third-party production of documents and witnesses. Furthermore, although the definition of appropriate remediation broadly echoes past guidance on the development and implementation of effective compliance programs they represent a more fulsome explication of what the Department is looking for and reflect some new and significant elements. For example, they require that companies “prohibit[] employees from using software that generates but does not appropriately retain business records or communications.”

While the announcement is likely to generate a deal of excitement given that it paves the path forward to generate a “presumption that the company will receive a declination,” we caution that a presumption may nonetheless, under certain circumstances, be overcome. The scope of prosecutorial discretion in determining whether any of the broadly-stated aggravating circumstances may apply, and whether a company has met its burden in demonstrating that it has made a voluntary self-disclosure, has fully cooperated, and has taken timely and appropriate steps to remediate the misconduct remains unclear. It should also be noted that declinations will be made public. Thus, while the new policy offers a potentially significant benefit, the voluntary disclosure decision will likely still be one that requires careful weighing, as today more than ever, the company will be opening itself up to scrutiny from multiple quarters.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/11/deputy-attorney-general-rosenstein-announces-significant-new-fcpa-corporate-enforcement-policy/Trump Designates North Korea as a ‘State Sponsor of Terrorism,’ Makes Additional Sanctions Designationshttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/wMOn_ykPspM/
Tue, 28 Nov 2017 15:33:00 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1843Continue Reading]]>On November 20, 2017, President Trump announced that North Korea would be designated a “state sponsor of terrorism.” The only other countries with this designation are Syria, Iran, and Sudan. The president also stated that the United States would announce the imposition of additional sanctions on Pyongyang. The next day, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced sanctions against one individual, 13 entities, and 20 vessels operating in or with ties to North Korea.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/11/trump-designates-north-korea-as-a-state-sponsor-of-terrorism-makes-additional-sanctions-designations/UN and EU North Korea Sanctions: Impacts on European and Cross-Border Tradehttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/vOqiSJmlrxk/
Fri, 17 Nov 2017 23:32:34 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1841Continue Reading]]>As tensions continue to escalate between the United States and North Korea, and President Donald Trump and Kim Jong-Un trade increasingly tense lobs, the United Nations, the EU, the United States, and other countries continue to impose further stringent sanctions against North Korea to a breaking point (for details on UN Security Council Resolution 2375 and the US’s new sanctions, see our previous advisory). In our most recent advisory, we provide an overview of the EU sanctions measures imposed against North Korea, review their impact, and offer some reflections on actions that may take place in the future.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/11/un-and-eu-north-korea-sanctions-impacts-on-european-and-cross-border-trade/A ‘Modest Proposal’ for Cuba: OFAC, BIS and State Department Implement President’s New Cuba Policyhttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/rVFJ8UD1LEw/
Thu, 16 Nov 2017 15:35:23 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1838Continue Reading]]>Effective November 9, 2017, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) amended the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), respectively, to implement US Cuba sanctions policy changes President Trump announced in a presidential memorandum issued June 16, 2017. Concurrently, as required by the presidential memorandum, the Department of State published a list of 180 entities and subentities associated with Cuban military, intelligence, and security services (Cuba Restricted List). As such, US government policy establishes that direct financial transactions conducted by persons subject to US jurisdiction with persons identified on the Cuba Restricted List would disproportionately benefit them at the expense of the Cuban people or private enterprise in Cuba.

Even though President Trump announced in June that he was “cancelling the last administration’s completely one-sided deal with Cuba,” the memorandum he issued in June, and the regulatory changes implemented by the State, Treasury, and Commerce Departments last week, reflect relatively moderate changes to US Cuba sanctions policy, as we previously explained in our June advisory on the matter. While these changes limit certain US business activity with, and travel to, Cuba, they do not reflect a roll-back of all (or even most) of the Obama Administration’s significant Cuba sanctions reforms.

]]>https://www.steptoeinternationalcomplianceblog.com/2017/11/a-modest-proposal-for-cuba-ofac-bis-and-state-department-implement-presidents-new-cuba-policy/Russian Sanctions Update: OFAC Amends Directive 4 and Updates FAQ Guidancehttp://feeds.lexblog.com/~r/InternationalComplianceBlog/~3/HNzd37PD7g4/
Wed, 15 Nov 2017 14:33:06 +0000https://www.steptoeinternationalcomplianceblog.com/?p=1834Continue Reading]]>On October 31, 2017, the Office of Foreign Assets Control (OFAC) took a number of actions to implement the Countering Russian Influence in Europe and Eurasia Act (CRIEEA) (also known as the Countering America’s Adversaries Through Sanctions Act (CAATSA), a larger sanctions statute of which CRIEEA was a part). As part of this, OFAC amended Directive 4 under Executive Order 13662—related to prohibitions on supplying Russian oil projects—and issued updated Frequently Asked Question (FAQ) guidance on restrictions related to foreign financial institutions, facilitating transactions with sanctioned persons, sanctions evasion, and investments in Russian state-owned assets. OFAC also provided guidance regarding CRIEEA’s authorization of sanctions targeting the railway and metal and mining sectors.

Expansion of Prohibitions on Supplying Russian Oil Projects

Directive 4 as amended prohibits U.S. persons from directly or indirectly providing, exporting, or re-exporting goods, services (except for financial services), or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that meet all three of the following criteria: (1) the project was initiated on or after January 29, 2018; (2) the project has the potential to produce oil in any location; and (3) Russian individuals or entities designated under Directive 4—individually or in the aggregate—either have a 33 percent or greater ownership interest in the project or own a majority of the voting interests in the project. Directive 4 does not apply to gas-only projects.

OFAC also clarified that a project is “initiated on or after January 29, 2018”—such that it could fall under the purview of Directive 4—“when a government or any of its political subdivisions, agencies, or instrumentalities (including any entity owned or controlled directly or indirectly by any of the foregoing) formally grants exploration, development, or production rights to any party.” This implies that existing projects and new developments of existing exploration prospects likely will not be affected by the amended Directive.

OFAC also has provided guidance regarding indirect ownership interests in projects held by sanctioned persons, and when such indirect ownership will subject the project to the restrictions of Directive 4. Specifically, OFAC provided the following three examples:

Example 1: An SSI entity listed under Directive 4 (“Entity A”) has a 33 percent ownership interest in a deepwater, Arctic offshore, or shale project initiated on or after January 29, 2018 that has the potential to produce oil (“Project X”). The prohibition of subsection 2 of Directive 4 applies to Project X. Consequently, U.S. persons are prohibited from providing goods, services (except for financial services), or technology in support of exploration or production for Project X.

Example 2: Instead of holding a direct interest in Project X, Entity A now owns 50 percent of Entity B, and Entity B holds a 33 percent interest in Project X. As a result of OFAC’s 50 percent rule, Entity B is subject to Directive 4. Because Entity B is subject to Directive 4 and owns a 33 percent or greater interest in Project X, the prohibition of subsection 2 of Directive 4 applies to Project X. Consequently, U.S. persons are prohibited from providing goods, services (except for financial services), or technology in support of exploration or production for Project X.

Example 3: Entity A now owns only 33 percent of Entity B, and Entity A is the only SSI entity that owns any interest in Entity B. Entity B holds a 100 percent ownership interest in Project X. Entity A owns less than 50 percent of Entity B, and so, in accordance with the 50 percent rule, Entity B is not subject to Directive 4. The prohibition of subsection 2 of Directive 4 would therefore not apply to Project X, even though Entity B owns an interest in the project that is 33 percent or greater.

Foreign Financial Institutions

Under Section 226 of CRIEEA, which amends Section 5 of the Ukraine Freedom Support Act of 2014, the Department of Treasury must impose restrictions on US correspondent and payable-through accounts (which could include terminating or suspending such accounts) for foreign financial institutions (FFIs) that:

(2) “knowingly facilitate significant financial transactions” on behalf of any Russian person designated on OFAC’s Specially Designated Nationals and Blocked Persons (SDN) List pursuant to any executive order addressing the crisis in Ukraine.

According to OFAC FAQ guidance, FFIs will not be subject to sanctions under this amended section solely on the basis of knowingly facilitating significant financial transactions on behalf of persons listed on OFAC’s Sectoral Sanctions Identification (SSI) List.

In its updated FAQ guidance, OFAC defines the terms “significant transaction,” “significant’ financial transaction,” and “facilitated”—all of which it interprets broadly.

In addition, the guidance clarifies that the Department of Treasury will notify a financial institution that it has imposed prohibitions on correspondent accounts or payable-through accounts for the foreign financial institution by adding its name to a yet-to-be created list similar to the Part 561 List in the Iran sanctions context. The Department of Treasury will establish and publicize the list before adding any FFIs to it.

Facilitating Transactions with SDNs / Sanctions Evasion

Section 228 of CRIEEA (which adds a new Section 10 to the Support for the Sovereignty, Integrity, Democracy, and Economic Stability of Ukraine Act of 2014 (SSIDES)) requires the president to impose blocking sanctions (i.e., designation on OFAC’s SDN List) on a “foreign person”—a term that includes not only FFIs, but all non-U.S. persons, including dual U.S. nationals—that the president determines “knowingly” does either of the following:

“Materially violates, attempts to violate, conspires to violate, or causes a violation of” any Russia sanctions executive order or statute; or

“Facilitates a significant transaction or transactions, including deceptive or structured transactions, for or on behalf of” any person “subject to sanctions imposed by the United States with respect to the Russian Federation” or their immediate family members.

OFAC interprets the term “materially violates” to refer to egregious violations.

The latter restriction, targeted on facilitating significant transactions on behalf of Russian sanctioned persons, is quite broad, as noted in our previous advisory. The restriction covers not only “deceptive” and “structured” transactions (with structured transactions being a type of deceptive transaction), but all “significant” transactions with persons “subject to sanctions imposed by the United States with respect to the Russian Federation.” OFAC’s updated FAQ guidance clarifies that that OFAC will interpret this term to mean persons subject to sanctions under SSIDES, under the Ukraine Freedom Support Act (UFSA), or under the several Ukraine-related executive orders in place. This includes persons listed on the SDN List, the SSI List, and persons subject to sanctions pursuant to OFAC’s 50 percent rule.

However, OFAC’s interpretation of the term “significant transaction” may blunt the impact of this provision somewhat. Specifically, OFAC indicates that a transaction is not “significant” if U.S. persons “would not require specific licenses from OFAC to participate in it.” Furthermore, transactions only involving persons on the SSI List will be considered potentially significant only where they involve “deceptive practices (i.e., attempts to obscure or conceal the actual parties or true nature of the transaction(s), or to evade sanctions).”

OFAC’s guidance also defines the following relevant terms: “foreign person,” “knowingly,” “materially violate,” “facilitates . . . for or on behalf of,” and “deceptive or structured transaction.” The interpretation of the term “facilitation . . . or on behalf of” is particularly notable. OFAC interprets the term to mean providing assistance for a transaction from which a sanctioned person “derives a particular benefit of any kind[,]” including “the provision or transmission of currency, financial instruments, securities, or any other value; purchasing, selling, transporting, swapping, brokering, financing, approving, or guaranteeing; the provision of other services of any kind; the provision of personnel; or the provision of software, technology, or goods of any kind.” It distinguishes this from “a generalized benefit conferred upon undifferentiated persons in aggregate,” which is not covered by this language.

Investments in Russian State-Owned Assets:

Section 233 of CRIEEA requires the president to impose five or more menu-based sanctions on “a person,” who, “with actual knowledge…makes an investment of $10,000,000 or more (or any combination of investments of not less than $1,000,000 each, which in the aggregate equals or exceeds $10,000,000 in any 12-month period), or facilitates such an investment, if the investment directly and significantly contributes to [Russia’s ability to] privatize state-owned assets in a manner that unjustly benefits—(1) officials of the Government of the Russian Federation; or (2) close associates or family members of those officials.”

In its updated FAQ guidance, OFAC defined the terms “investment,” “facilitates,” “unjustly benefits,” and “close associates or family members,” which it has interpreted broadly. Such broad interpretations include those for “investment,” defined as a “commitment or contribution of funds or other assets or a loan or other extension of credit to an enterprise,” and “unjustly benefits,” defined as “activities such as public corruption that result in any direct or indirect advantage, value, or gain, whether the benefit is tangible or intangible, by officials of the Government of the Russian Federation, or their close associates or family members.”

Railway/Metals and Mining Sectors

Section 223(a) of CRIEEA provides that the “Secretary of the Treasury may determine that a person meets one or more of the criteria in section 1(a) of Executive Order No. 13662 if that person is a state-owned entity operating in the railway or metals and mining sector of the economy of the Russian Federation.”

OFAC has provided the following guidance regarding this section:

Section 223(a) of CAATSA does not require the imposition of sanctions. While sanctions may be imposed on potential targets in any sector of the economy of the Russian Federation in the future, maintaining unity with partners on sanctions implemented with respect to the Russian Federation is important to the U.S. government. The point of the sectoral sanctions is to impose costs on the Russian Federation for its aggression in Ukraine. The United States will continue to work closely with our allies to address unintended consequences arising as a result of such sanctions.

(emphasis added)

The reference to “unintended consequences” may be a first for an OFAC FAQ. While the reference is not clear, OFAC may be referring to an unintended chilling effect on business brought about by existing sectoral sanctions, or unintended confusion resulting from Section 223(a) of CRIEEA/CAATSA.

In any event, as OFAC notes, Section 223(a) does not impose new sanctions, but rather authorizes the imposition of “sectoral” sanctions targeting the railway and metals and mining sectors—an authorization already included within the scope of Executive Order 13662, issued in March 2014. Specifically, that executive order provides that the Secretary of the Treasury may designate any person determined “to operate in such sectors of the Russian Federation economy as may be determined by the Secretary of the Treasury, in consultation with the Secretary of State, such as financial services, energy, metals and mining, engineering, and defense and related materiel.” Section 223(a) of CRIEEA/CAATSA essentially reiterates that the Treasury Department may target any sector of the Russian economy it sees fit, including the railway and metals and mining sectors. The reference to the railway sector, which is not mentioned in Executive Order 13662, is especially noteworthy.

Conclusion

Both U.S. and non-U.S. persons should take note of the newly implemented CRIEEA sanctions. For U.S. persons engaged in exploration or production on frontier energy projects, newly amended Directive 4 may present significant compliance challenges when it becomes effective in January, and appropriate due diligence will be warranted. For non-U.S. persons, the restrictions on facilitating transactions with Russian SDNs in particular will be of concern, and due diligence in this context is warranted as well.

From “decertifying” the Iran deal to disputes with “Rocket Man,” the economic sanctions world has seen dizzying changes over the last several months. This webinar will explore the most recent developments under U.S. sanctions, and will touch upon the related EU sanctions context, with a focus on sanctions against Russia, Iran, Venezuela, North Korea, and Cuba.